Executive Summary / Key Takeaways

• Piedmont Lithium is strategically consolidating its North American lithium assets through a proposed merger with Sayona Mining (SYA), aiming to create a larger, more relevant, and financially resilient entity, Elevra Lithium, positioned to capitalize on future demand growth.
• Current operations at the North American Lithium (NAL) joint venture are generating revenue, with Q1 2025 sales volume increasing significantly year-over-year, though profitability remains challenged by depressed lithium prices, highlighting the impact of market volatility.
• The company is exercising strict capital discipline, implementing cost savings, deferring non-essential project spending (like certain Carolina Lithium land purchases), and leveraging a credit facility to preserve liquidity during the market downturn, expecting cash levels to remain stable in Q2 2025.
• Development of key projects like the integrated Carolina Lithium and Ghana's Ewoyaa is proceeding on a measured timeline, contingent on improved market conditions and securing strategic project-level funding to minimize shareholder dilution.
• The long-term investment thesis hinges on the anticipated recovery in lithium prices driven by accelerating EV and energy storage demand, coupled with supply constraints from deferred greenfield projects, positioning Piedmont's strategically located North American assets and diversified portfolio for significant upside.

Forging a Multi-Asset Foundation in North America

Piedmont Lithium Inc. is carving out a distinct position in the burgeoning North American electric vehicle and battery supply chain. As a U.S.-based, development-stage company, its core mission is to become a leading domestic supplier of lithium products, primarily lithium hydroxide, by processing spodumene concentrate from a diversified portfolio of hard rock assets. This strategy is deeply intertwined with the broader imperative of enhancing U.S. energy security and reducing reliance on foreign critical mineral sources, a theme gaining increasing prominence in policy discussions.

The company's journey has been marked by strategic investments and project advancements. From its foundational Carolina Lithium project in North Carolina, envisioned as a unique integrated mine-to-hydroxide operation, Piedmont expanded its reach through key joint ventures. A significant step was acquiring a 25% equity interest in Sayona Quebec, securing a crucial offtake agreement for spodumene concentrate from the North American Lithium (NAL) mine. Further diversification included an investment in Atlantic Lithium (ALL) for the Ewoyaa project in Ghana and an earn-in agreement for the Killick Lithium exploration property in Newfoundland, Canada.

This multi-asset approach is designed to provide scale and geographic diversity, mitigating risks associated with single-project development and regional concentration. However, operating in the volatile lithium market has presented challenges. The sharp market downturn experienced in 2024 necessitated a strategic response, leading to the implementation of a comprehensive cost savings plan that included significant workforce reductions and a curtailment of non-essential spending across the portfolio. This period of market headwinds has underscored the importance of operational efficiency and financial resilience.

Central to Piedmont's long-term strategy is its focus on hard rock spodumene resources. While the company is still in the development phase for its integrated hydroxide production, its current revenue stream is derived from the sale of spodumene concentrate from the NAL joint venture. The planned Carolina Lithium project aims to leverage a fully integrated model, processing spodumene ore mined on-site into battery-grade lithium hydroxide. This integrated approach, while capital intensive, is designed to capture the full value chain and potentially offer cost and logistical advantages compared to projects that require transporting concentrate over long distances for conversion. The company anticipates that its processing methods, coupled with the strategic location of its assets, will contribute to a lower carbon footprint compared to some alternative lithium extraction methods, a potential differentiator in an increasingly ESG-conscious market. While specific quantifiable metrics on the energy efficiency or processing speed advantages of Piedmont's planned technology over all alternatives are not extensively detailed, the strategic intent is clearly to build operations that are both cost-competitive and environmentally responsible, leveraging the inherent characteristics of hard rock processing and integrated operations where possible.

Performance Amidst Market Headwinds

Piedmont's recent financial performance reflects the dual reality of advancing operations and navigating a challenging commodity price environment. In the first quarter of 2025, the company reported revenue of $20.0 million, a notable increase from $13.4 million in the same period of 2024. This 49.2% revenue growth was primarily driven by a substantial 74.2% increase in spodumene concentrate sales volume from the NAL joint venture, rising to approximately 27,000 dry metric tons (dmt) from 15,500 dmt.

However, the impact of the lithium market downturn was evident in the realized pricing. The average realized price for spodumene concentrate declined by 14.3%, from $865 per dmt in Q1 2024 to $741 per dmt in Q1 2025. This price pressure significantly compressed margins, resulting in a gross profit of only $0.1 million in Q1 2025, down sharply from $0.7 million in the prior year period. The gross profit margin plummeted from 5.2% to a mere 0.7%. This illustrates the direct and immediate impact of lithium price volatility on the company's current revenue-generating operations.

Operating expenses saw a positive trend, decreasing by 16.9% to $6.8 million in Q1 2025 from $8.1 million in Q1 2024. This reduction was largely a result of the company's 2024 Cost Savings Plan, which led to lower employee compensation costs due to workforce reductions and reduced third-party spending. Restructuring charges also decreased significantly, primarily related to winding down activities at the Tennessee Lithium site as its planned capacity is consolidated into Carolina Lithium.

The loss from equity method investments decreased slightly to $4.9 million in Q1 2025 from $5.4 million in Q1 2024. This change was influenced by the fact that Sayona Mining and Atlantic Lithium were no longer accounted for under the equity method as of March 31, 2024, offsetting an increased share of loss from the ongoing Sayona Quebec joint venture. Other expense also saw a substantial decrease, falling from $12.0 million in Q1 2024 to $3.8 million in Q1 2025, primarily because the prior year period included a large non-recurring loss on the sale of Sayona Mining shares.

Overall, the net loss for Q1 2025 was $15.6 million, an improvement from the $23.6 million net loss in Q1 2024. While the bottom line showed improvement, largely due to reduced expenses and the absence of prior-year one-off losses, the core operational profitability remains challenged by the low lithium price environment.

Liquidity and Capital Discipline

As of March 31, 2025, Piedmont's liquidity was anchored by $65.4 million in cash and cash equivalents and a fully-utilized $25.0 million Credit Facility. This facility, based on committed spodumene concentrate volumes, provides a crucial working capital buffer, although it includes provisions allowing the lender to modify terms or accelerate repayment if the company's creditworthiness materially changes.

The company's cash burn in Q1 2025 was primarily driven by working capital requirements related to purchasing spodumene concentrate from NAL, corporate overhead, costs associated with the 2024 Cost Savings Plan ($1.3 million in cash payments), real property acquisitions for Carolina Lithium ($1.1 million), advances to Atlantic Lithium for Ewoyaa development ($0.9 million), and costs related to the proposed merger.

Management has placed a strong emphasis on capital discipline in response to market conditions. The 2024 Cost Savings Plan, now completed, is expected to yield ongoing benefits in reducing the operational cost structure. Looking ahead, the company has significantly reduced its capital expenditure and joint venture investment guidance for 2025. Full-year 2025 CapEx is now projected between $4 million and $6 million (down from prior guidance), partly due to deferring or opting out of certain land purchases for the Carolina Lithium project. Joint venture investments and advances are guided to be between $7 million and $13 million for the full year 2025, a substantial decrease from $26 million in 2024.

Despite the cash used in operating and investing activities in Q1 2025, management anticipates that the cash balance at the end of Q2 2025 will be similar to the Q1 level, primarily due to the timing of working capital associated with sales. The company believes its current liquidity, combined with the Credit Facility and ongoing cost controls, will be sufficient to fund operations and meet obligations for the next twelve months. However, funding for future project development will require additional capital, which the company expects to secure through a combination of strategic partnerships, asset sales, equity offerings, and debt financings.

Strategic Consolidation and Future Outlook

The most significant strategic initiative for Piedmont Lithium is the proposed merger with Sayona Mining, announced in November 2024 and amended in April 2025. This stock-for-stock combination aims to create a unified entity, Elevra Lithium Limited, by bringing together the two largest stakeholders in the North American Lithium (NAL) operation and combining complementary development portfolios. The strategic rationale is compelling: consolidating control over NAL's production is expected to increase market relevance and operational efficiency. The merger also unlocks potential brownfield expansion opportunities at NAL, leveraging existing infrastructure, and adds Sayona's Moblan project, described as a transformative, large, high-grade asset, to the combined portfolio. Corporate synergies of $15 million to $20 million annually are anticipated, and the merger is supported by committed funding from Resource Capital Funds. Regulatory approvals in the U.S. and Canada have been secured, and the merger is expected to close in mid-2025, subject to shareholder approvals. This transaction is poised to fundamentally reshape Piedmont's structure and competitive standing.

Beyond the merger, Piedmont's outlook is centered on advancing its key development projects on a measured timeline, contingent on market conditions and funding. The Carolina Lithium project remains a cornerstone, with plans to consolidate the Tennessee Lithium hydroxide capacity into a phased, larger operation (up to 60,000 tpa) on the Carolina site. This streamlining is intended to improve capital and technical resource efficiency. Progress continues on permitting, with the state mining permit secured and optimism for air and water permits in the coming year. However, a final investment decision and construction are contingent on finalizing project financing, including potential strategic partnerships and government loans (like the ATVM program), which management indicates is unlikely in the immediate future given current lithium prices.

Similarly, the Ewoyaa project in Ghana is advancing through permitting, with the mining lease awaiting parliamentary ratification. Piedmont is seeking non-dilutive funding for its share of the development capital, likely through offtake agreements. Like Carolina Lithium, the development timeline for Ewoyaa is subject to prevailing market conditions, as current prices do not support accelerating construction.

The near-term outlook for shipments from NAL is guided at 8,000 to 20,000 dmt for Q2 2025, with a full-year target of 113,000 to 130,000 dmt (including volumes shifted from 2024). This guidance reflects the lumpy nature of shipments and the strategic focus on optimizing logistics, such as combining cargoes to reduce costs.

Competitive Landscape and Positioning

Piedmont Lithium operates within a competitive global lithium market dominated by larger, established players like Albemarle (ALB) and SQM (SQM), who possess significant scale, diversified operations (brine and hard rock), and robust financial profiles. These incumbents benefit from lower operating costs per unit due to their mature assets and infrastructure, reflected in their significantly higher gross and operating margins compared to Piedmont's current performance. For example, SQM's 2024 gross margins were around 29%, vastly exceeding Piedmont's Q1 2025 margin of 0.7%.

Piedmont's competitive positioning is currently that of a development-stage company with a producing asset (NAL) and significant growth potential. Its strategic advantage lies in its focus on North American assets, which are increasingly valued for supply chain security and potential eligibility for incentives like the IRA 45X tax credit (which Piedmont believes will materially improve Carolina Lithium's economics). This geographic focus differentiates it from primarily South American brine producers like SQM and provides a domestic angle compared to global players like ALB.

Against North American peers like Lithium Americas (LAC), which also has significant development projects, Piedmont's NAL operation provides a crucial revenue stream and operational experience that LAC currently lacks from its development assets. While both face funding challenges for large-scale projects in the current market, Piedmont's existing production and the planned merger offer a different scale and complexity profile.

Piedmont's planned integrated Carolina Lithium project represents a potential competitive moat, aiming to capture the full value chain from mine to hydroxide on a single site. This integrated model, combined with the potential for lower carbon intensity from hard rock processing, could position it favorably with battery manufacturers seeking secure, sustainable, and IRA-compliant supply. However, realizing this potential requires significant capital investment and successful execution, areas where larger competitors with deeper pockets and extensive operational histories hold an advantage.

The proposed merger with Sayona Mining is a transformative step aimed at addressing the scale disadvantage. By combining NAL production and development pipelines, the merged entity is expected to have increased relevance as a supplier and a stronger platform for future growth and financing compared to either company individually. This consolidation is a direct strategic response to the competitive pressures of the global market, seeking to build a North American powerhouse capable of competing more effectively with larger international players.

Risks and Challenges

Despite its strategic vision and asset potential, Piedmont Lithium faces significant risks. The most immediate is the volatility of lithium prices. The current low-price environment severely impacts profitability from NAL sales and makes financing for large-scale development projects challenging, potentially delaying timelines for Carolina Lithium and Ewoyaa.

Funding risk is paramount. Developing multi-billion dollar projects like Carolina Lithium requires substantial capital. The company's ability to secure strategic partnerships, government financing (like the ATVM loan), or raise funds through equity/debt offerings on favorable terms is critical and not guaranteed, especially in a depressed market. Failure to secure funding could force delays or even abandonment of development activities.

Permitting and regulatory approvals for projects like Carolina Lithium and Ewoyaa are complex and subject to potential delays or challenges (e.g., the pending parliamentary ratification for Ewoyaa's mining lease, or local rezoning for Carolina Lithium). Legal proceedings, although some recent challenges have been dismissed, remain a potential risk.

The proposed merger with Sayona Mining is subject to closing conditions, including shareholder approvals. While regulatory clearances have been received, there is no guarantee the merger will be completed by the targeted mid-2025 timeframe or at all, which could impact the strategic rationale and future plans.

Changes in international trade policy, such as tariffs on lithium products, could adversely affect the business by impacting demand, costs, and supply chain dynamics. While the company anticipates a lower tariff rate for NAL spodumene into the U.S., the situation remains uncertain and could evolve.

Operational risks at NAL, such as weather-related downtime experienced in Q1 2025, can impact production volumes and profitability. While process optimization is ongoing, mining challenges related to old workings are expected to continue impacting costs in the near term.

Conclusion

Piedmont Lithium stands at a pivotal juncture, strategically positioning itself to become a significant player in the North American lithium supply chain. The proposed merger with Sayona Mining represents a bold move to consolidate assets, enhance scale, and build a more resilient entity, Elevra Lithium, capable of navigating the inherent cyclicality of the lithium market. While current financial performance is challenged by depressed lithium prices, the company's operational execution at NAL is improving, and strict capital discipline is helping to preserve liquidity during the downturn.

The core investment thesis is grounded in the long-term demand growth for lithium, driven by the accelerating adoption of electric vehicles and energy storage solutions. With greenfield project development globally slowing due to low prices, a future supply deficit appears increasingly likely, which could drive a significant recovery in lithium prices. Piedmont's portfolio of strategically located North American assets, particularly the integrated Carolina Lithium project and the potential for expansion at NAL, positions it with significant leverage to such a recovery. Success hinges on the completion of the merger, securing necessary project financing and permits, and effectively executing its development plans. Investors should closely monitor progress on the merger, lithium market price trends, and the company's ability to secure funding and advance its key projects towards production. The path forward involves inherent risks, but the potential rewards in establishing a domestic lithium supply powerhouse are substantial.